Philadelphia House Price Indices

PHILADELPHIA HOUSE PRICE INDICES

April 28, 2015

KEVIN C. GILLEN, Ph.D. [email protected]

Disclaimers and Acknowledgments: The Lindy Institute for Urban Innovation at Drexel University provides this report free of charge to the public. The report is produced by Lindy Senior Research Fellow Kevin Gillen, in association with Meyers Research LLC. The author thanks Azavea.com, the Philadelphia Office of Property Assessment, the Federal Housing Finance Agency, Case-Shiller MacroMarkets LLC, RealtyTrac, Zillow.com, Trulia.com and the NAHB for making their data publicly available. © 2015, Drexel University, All Rights Reserved.

550.0 Phila. County* Phila. MSA** 500.0 U.S. Avg.**

450.0

400.0

350.0

300.0

250.0

200.0

150.0 Q1 100.0

* Empirically estimated by Kevin C. Gillen, Ph.D. **Courtesy of the Federal Housing Finance Agency (FHFA). HPIs are available through 2014Q4 only. © 2015 Drexel University | [email protected] “MSA”=Metropolitan Statistical Area, which is the entire 9-county region. Total House Price Appreciation Rates by Geographic Market

Philadelphia Philadelphia Period U.S.A.** County* MSA**

36-Year 137.8% 169.1% 127.6%

10-Year 4.5% 19.3% 8.4%

1-Year 4.1% 2.0% 4.8%

1-Quarter -0.3% -1.0% 1.3%

*Empirically estimated by Kevin C. Gillen Ph.D.

**Source: U.S. Federal Housing Finance Agency (FHFA). These numbers are through 2014Q4 only. “MSA”=“Metropolitan Statistical Area”, which is the entire 10-county region.

10-City Composite* 340 Philadelphia

290

240 % Change 10-City Philadelphia 1998 to Peak: +173% +136% From Peak: -17% -15% 190

140

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014 2015

*Source: S&P/Case-Shiller. The 10-City Composite index includes Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, DC. It does not include Philadelphia. © 2015 Drexel University | [email protected] Philadelphia House Price Indices by Neighborhood: 1980-2015 1980Q1=100 800.0

CtrCity/Fairmount 700.0 Kensington/Frankford Lower NE Phila. North Phila. 600.0 NW Phila. South Phila. Univ. City 500.0 Upper NE Phila. West Phila.

400.0

300.0

200.0

Q1 100.0

Center Lower Upper City/ Kensington NE North NW South Univ. NE West Period Fairmount /Frankford Phila. Phila. Phila. Phila. City Phila. Phila.

36-year 162.0% 150.3% 125.3% 150.9% 163.8% 193.7% 186.1% 161.9% 157.7%

10-year 7.8% 15.5% -1.3% 19.2% 0.3% 44.0% 13.6% 9.0% 31.5%

1-Year -1.8% 0.0% 1.4% 0.6% -3.6% 6.3% 10.2% 1.1% 8.9%

1-Quarter -1.4% -1.7% -0.8% -4.1% -2.6% 1.0% 6.9% 0.5% 0.4%

This table gives the total % change in house prices by neighborhood, through 2015 Q1, from different starting points in time.

$140,000

$120,000

Median Price

$100,000 Indexed Price*

$80,000

$60,000

$40,000

$20,000

1991 2014 2015 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$40,000

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

$5,000

1983 1988 2012 1980 1981 1982 1984 1985 1986 1987 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015

Q1 7,000 Q2 Q3 6,000 Q4

5,000

Qtly. Average 4,000

3,000

2,000

1,000

1981 1980 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

*Only arms-length transactions between private sector entities were included in these numbers. © 2015 Drexel University | [email protected] Number of Philadelphia Home Sales* per Quarter with Price>=$1 Million: 1997-2015

25 Q2

Q3 20 Q4

10 Qtly. Average

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

NW Phila: -2.6%

Univ. City: +6.9% Lower NE Phila: -0.8%

Kensington/Frankford: -1.7%

West Phila: +0.4% Center City/Fairmount: -1.4%

South Phila: +1.0%

Note: Each neighborhood is extruded by its average change in house values during 2015 Q1 in order to reflect its growth (or depreciation) rate relative to other neighborhoods. © 2015 Drexel University | [email protected] +$1 Million Dollar House Sales in 2015 Q1

Price Price/SqFt Address $1,075,000 $347 1424 BAINBRIDGE ST $1,120,000 $465 322 S QUINCE ST $1,159,500 $403 216 GASKILL ST $1,199,000 $361 614 S HANCOCK ST $1,200,000 $1,000 2405 PINE ST $1,360,000 $282 744 S 10TH ST $1,435,000 $297 1710 PINE ST $1,685,000 $487 415 PINE ST $1,695,000 $646 248 S 03RD ST $1,705,000 $410 225 GASKILL ST $1,727,000 $432 400 SPRUCE ST $1,925,000 $527 2502 DELANCEY PL

400.0

100%

350.0

50% 300.0

250.0 0%

HPI: 1980Q1=100 HPI: 200.0 -50%

150.0

-100% The diffusion index measures how varied the direction of house price changes are across Philadelphia 100.0 neighborhoods. It is computed as the percent difference between the number of neighborhoods in which prices rose in a given quarter, and the number of neighborhoods in which prices fell. A value of -100% indicates that prices fell in all neighborhoods in a given quarter, while a value of +100% indicates that -150% 50.0 prices rose in all neighborhoods. A value of 0% indicates that house price changes were evenly split between increases and decreases, across neighborhoods. Diffusion indexes are commonly used in financial economics as a leading indicator of turning points in a market's direction.

0.0 -200%

1988 2001 2003 1980 1981 1982 1983 1984 1985 1986 1987 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

This chart compares the 400.0 Philadelphia House Price 80% Index (in red) to the percent of Philadelphia 350.0 neighborhoods that 70% experienced house price

declines (in blue) , in each % quarter from 1980-2014.

300.0 60% Declining

250.0 50%

200.0 40% HPI: 1980Q1=100 HPI:

150.0 30%

100.0 20%

50.0 10%

0.0 0%

1984 2003 1980 1981 1982 1983 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

© 2015 Drexel University | [email protected] Dispersion Index of Philadelphia Housing 6.00% The Dispersion Index measures how varied house price changes are across the city's neighborhoods. It is computed as the standard deviation of quarterly house prices changes across submarkets. High values of the index imply large variation in house price changes 5.00% between different neighborhods, while low values imply that house price changes are relatively the same across the city.

4.00%

3.00%

2.00%

1.00%

0.00%

1983 1980 1981 1982 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

3.50

3.25

3.00

2.75

2.50

2.25

2.00

1.75

1.50

1.25

*Affordability is measured as the ratio of the 1.00 median Philadelphia house price to the median Philadelphia household income. High values of the index mean that housing has become less 0.75 affordable to the average Philadelphian. Contact [email protected] for details.

0.50

1984 1991 1998 2005 2012 1980 1981 1982 1983 1985 1986 1987 1988 1989 1990 1992 1993 1994 1995 1996 1997 1999 2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 2013 2014 2015

14.0

13.0 U.S. 12.0 Philadelphia

11.0

10.0

9.0

8.0

7.0

6.0 *Computed by taking the ratio of average house price to the average annual rent of a comparable 5.0 housing unit. The P/R ratio is to real estate what the P/E ratio is to other assets. Contact [email protected] for further details. 4.0

180.0

160.0

140.0

120.0

100.0

80.0 Linear Trendline

60.0

40.0 *The empirically estimated house price index is deflated by the rate of inflation over time, using the national Consumer Price Index as the proxy for the national rate 20.0 of inflation. This procedure converts the house price index from "nominal" to "real" terms, and thus shows house price changes net of general inflation. 0.0

12,000

25% %Absorbed(#Sales/#Listings) =

10,000

20%

8,000

15%

6,000

# Homes Listed "For Sale" "For Listed Homes # 10%

4,000

5% 2,000

0 0%

“%Absorbed” is defined as the percent of homes listed for sale in a given month that also sold in that same month. Source: Trend MLS © 2015 Drexel University | [email protected] Average Days-on-Market* for Philadelphia Homes 100

70 # of of #Days

40 *Days-on-Market (DOM) is the average number of days it takes for a listed house to sell.

National 80 Northeast

The Index represents the current sentiment of 20 U.S. homebuilders. The index is computed via a regular monthly survey of homebuilders. An index value above 50 indicates that more 10 builder are optimistic than pessimistic, while an index value below 50 indicates that more builders are pessimistic than optimistic.

2000 2008 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2015

$300

$250

$200

$150

$100

The PHLX Housing Sector Index is a modified cap- weighted index composed of 20 companies whose $50 primary lines of business are directly associated with the U.S. housing construction market. The index composition encompasses residential builders, suppliers of aggregate, Note: the index underwent a lumber and other construction materials, manufactured significant rebalancing in housing and mortgage insurers. January of 2006.

2006 2007 2011 2012 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015

80%

70%

60% $90,000-$250,000

50%

40%

30%

20% <=$90,000

10%

<=$90k $90k-$250k >$250k

Zillow currently rates the Philadelphia housing market as “cold”, which is a downgrade from its previous quarter’s rating of “cool”. However, Zillow is also forecasting Philadelphia house prices to rise an average of 2.3% over the next year, which is an upgrade of its previous quarter’s annual forecast of 0.5%. Source: http://www.zillow.com/philadelphia-pa/home-values/ © 2015 Drexel University | [email protected]